May 13, 2011 / 4:46 PM / 6 years ago

U.S. House panel votes to weaken consumer watchdog

* Three Republican measures target new Dodd-Frank bureau

* Measures likely to whither in Demicrat-controlled Senate

* Obama has been strong supporter of consumer watchdog

By Kevin Drawbaugh

WASHINGTON, May 13 (Reuters) - The power and independence of a new U.S. financial consumer watchdog agency would be curbed under three pieces of legislation approved on Friday by a Republican-controlled House of Representatives panel.

The measures may win approval in the full House later, but analysts do not expect them to become law.

Democrats in control of the Senate oppose them, as does President Barack Obama, who could veto. Obama has been a strong supporter of the Consumer Financial Protection Bureau (CFPB), which Republicans and the banks want to undermine.

The three bills are part of a broad effort by House Republicans to pick apart the 2010 Dodd-Frank financial regulation reforms via legislation.

"These bills will help make sure the consumer protection rules issued by the CFPB are consistent, fair and do not endanger the safety and soundness of financial institutions," said committee Chairman Spencer Bachus, a Republican.

Dodd-Frank was propelled through Congress by Democrats last year with the aim of bolstering government oversight of the financial system and preventing a repeat of the 2007-2009 banking crisis that dragged the economy into a deep recession, leading to taxpayer bailouts of Wall Street.

Republicans largely opposed Dodd-Frank last year throughout the debate. Since they took control of the House in November, they have been targeting the reforms for roll-back on multiple fronts, so far with little success.

Republicans, arguing that Dodd-Frank is an overreach by government that is weighing on credit markets, have also sought to cut funding for it at the agency level.

"It's outrageous that the Republicans continue to push these measures to dismantle Dodd-Frank ... in direct opposition to widespread public opinion, and in total disregard to recent history and common sense," said Democratic Representative Carolyn Maloney.

One of the Republican bills would put a five-member, bipartisan commission in charge of the CFPB, instead of a single director as called for by Dodd-Frank.

Another bill would make it easier for banking regulators from other agencies to block new rules put forth by the CFPB.

Republican Representative Shelley Moore Capito applauded the committee's passage of a third bill, which she backed, also dealing with the watchdog agency.

Her measure would block the CFPB from fully taking over financial consumer protection duties from other agencies until it has a director who is confirmed by the Senate.

Obama has not yet nominated a CFPB director.

Forty-four Republican senators said last week they would not vote to confirm any nominee unless the CFPB's powers were curbed.

Analysts said the Senate ultimatum could convince Obama to name a director while the Senate is in recess, side-stepping the confirmation process. Capito's measure, if approved, could negate such a recess appointment strategy.

"The powers of the CFPB are too broad to allow it to function fully without a confirmed director," Capito said. (Editing by Ted Kerr)

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